Yesterday, the Australian Competition and Consumer Commission (ACCC) announced it has commenced proceedings in the Federal Court against Microsoft for allegedly misleading approximately 2.7 million Australian consumers in relation to Microsoft 365 subscription plans.
The allegations
The ACCC alleges Microsoft misled subscribers on auto-renewing plans by stating they must accept the integration of its AI assistant, Copilot, and pay a higher subscription fee, or cancel their subscription. Microsoft failed to disclose a third option: the ability to switch to a “Classic” plan that retained existing features without Copilot, at the original price. This option was only revealed after a user initiated the cancellation process.
The ACCC contends that this omission deprived consumers of the ability to make informed choices and may have led many to unnecessarily accept higher-priced plans.
Consequences of misleading or deceptive conduct
Under the Australian Consumer Law, engaging in misleading or deceptive conduct or making false representations can result in significant consequences. Penalties range up to the greater of:
- $50 million;
- 3 x the ‘reasonably attributable’ benefit obtained from the conduct or representation; or
- 30% of the corporation’s adjusted turnover during the breach turnover period for the contravention.
Selling subscriptions? Key takeaways for you.
- Transparency is essential: Consumers are entitled to make informed decisions based on clear, complete and accurate information. Key information must be readily available at the right time.
- Communications clearance: Implement compliance checks across marketing, product and legal teams.
- Monitor and review processes: Monitor consumer feedback and complaints for early signs of confusion or dissatisfaction. Seek advice and take appropriate action promptly.
As subscription models become increasingly common, the ACCC’s action against Microsoft serves as a timely reminder that transparency and fairness are legal imperatives.
At CIE Legal, we focus on advising consumer businesses, including on misleading or deceptive conduct. Please reach out for further information.
